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DAVID BRUNER
Assistant Professor
Department of Economics
Appalachian State University
brunerdm@appstate.edu

Research
My research interests consists of issues involving information availability and/or asymmetry, belief formation, the roles of risk preference, and conflict.  Since my research interests are motivated by behavioral issues, I primarily employ experimental economics methods to collect data for empirical analysis. Below are links and brief abstracts of some of my research papers.
Here is my current CV.

 		                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             


Publications




A common mechanism to elicit risk preferences requires a respondent to make a series of dichotomous choices. A recurring problem with this mechanism is a frequently observed tendency to switch from the less to the more risky choice multiple times, multiple switching behavior. We introduce an instructional variation which our evidence suggests practically eliminates such behavior. We read a script emphasizing only one decision will determine earnings before providing written instructions. Emphasizing the incentive compatibility of the payment rule reduces observed multiple switching behavior from 13.3% to 2.3% in one format and from 25.8% to 6.7% in another.



There are two means of changing the expected value of a risk: changing the proabability of a reward or changing the reward.  Theoretically,  the former produces a greater change in expected utility for risk averse agents. This paper uses two formats of a risk preference elicitation mechanism to test this hypothesis. Subjects in our experiment, on average, appear risk averse and, as predicted, begin choosing a lottery over a guaranteed amount at a lower expected value in the format that varies the probability relative to the format that varies the reward. Both formats produce equivalent estimates of the average risk parameter.
      
                                               

The use of equity-based compensation is an increasingly popular means by which to align the incentives of top management with that of shareholders. However, recent theoretical and empircal research suggests that the use of equity-based compensation has the unintended consequence of creating the incentive to commit managerial fraud of the type being reported in the press. This paper reports experimental evidence showing that the amount of  fraud committed by subjects is positively correlated with the level of equity, as is the level of effort. As well, the amount of fraud that is committed  is negatively correlated with the probability of detection and subjects' risk aversion. The experimental design permits the identification of causal relations in the direction just noted.

WORKING PAPERS

 

We conduct an experiment using a risk preference elicitation mechanism to identify risk averse individuals and evaluate the frequency that they choose the stochastically dominant of two lotteries. 75.76% of risk averse and 96.15% of very risk averse subjects chose at least 7 out of 10 dominant lotteries. Estimates of the effect of elicited risk aversion on the number of stochastically dominant lotteries chosen are positive and highly significant across specifications suggesting violations are decreasing in risk aversion.



This paper tests the Nash equilibrium predictions of a two-period, two-player one-armed bandit problem with publicly available information. Public information allows individuals to learn from their own private outcomes and/or from the outcomes of the others. Public information creates an incentive to free-ride since, contrary to intuition, players may prefer a smaller sample size to a larger one. Subjects appear to undervalue information, however, behave strategically based on the value they place on information. When only one subject pulls the arm, it is the predicted subject at least 96% of the time, the others free-ride. Furthermore, subjects respond to information in a manner consistent with Bayesian updating with deviations being consistent with cognitive dissonance. Estimated regression coefficients are statistically significant and consistent with the summarized results.



This paper derives the conditions under which property rights can arise in an anarchy equilibrium. The creation of property rights requires that players devote part of their endowment to the public good. In the Nash equilibrium, no player contributes to the provision of property rights protection. Therefore, players are left with two alternatives. A king who provides property rights protection paid for by a tax on endowments completely eliminates conflict. However, a king who can eliminate conflict can also take the surplus for himself. As a despotic king inefficiently taxes endowments, players have an incentive to find a solution that keeps power in their own hands. Thus in a social contract, players first credibly commit part of their endowments to providing property rights and then allocate the balance of their endowments between production and conflict. A social contract can also drive conflict to zero. However, as the number of players rises, the private provision of property rights through a social contract results in positive levels of conflict and lower levels of aggregate welfare than under a benevolent king.







The failure of foreign aid to promote growth in the developing world has received significant  attention as evidence suggests that foreign aid does not translate into investment. This research has demonstrated that poor institutions in these developing economies (particularly with respect to property rights) results in an inability to fully appropriate the return to one's investment, thereby serving  as a prominent disincentive to investment. This paper presents an experimental test of a a 2-player, one-shot game of conflict in which we vary the strength of property rights. Our results suggest that stronger property rights reduce conflict and increase investment. In addition, we test the conventional wisdom that technological progress can increase the effectiveness of aid in stimulating investment. Contrary to intuition, we find technological progress has practically no effect on investment and that this failure to stimulate investment is largely due to deficiencies in property right institutions.